Employers sometimes offer benefits to their employees and want to pay the tax on behalf of the employees. A PAYE Settlement Agreement (PSA) is an annual voluntary agreement that allows them to do so. Any item covered by PPE does not need to be reported on an employee`s P11D form. PAYE Settlement Agreements (PSAs) are optional arrangements that allow employers to pay taxes and social security contributions (NICs) on benefits in kind on behalf of their employees. They are also useful if explaining the services on the P11D forms would be administratively complex. You will still need to use a payment reference, even if HMRC has not sent you a confirmation letter. Fortunately, you`ll find a payment reference in the HMRC letter that accompanies your countersigned P626 – the letter that struck the deal. While it is not specific to the tax year, it is unique to each employer and, therefore, HMRC has confirmed to us that it can be used in this situation. This is in the format XX0000123456789. These terms are not defined in the legislation. The rules require the employer and the HMRC agent to agree on whether payments will be made in an amount or circumstances that meet either of the conditions. In a conversation with the employer, the public servant is expected to make a reasonable judgment based on the natural meaning of the words. If you do not yet have PPE and do not meet this deadline, it is possible to make voluntary disclosure and billing for items that you would otherwise have included in a PSA.
However, in certain circumstances, HMRC may impose penalties and charge interest on amounts paid in this manner.